The department of economic affairs of the finance ministry has sought details from the department of telecommunications on the $23-billion deal between Indian telecom major Bharti Airtel and South African telco MTN.
In view of the foreign investment that would come into Bharti Airtel via the proposed share-swap and cash transaction arrangement, the finance ministry has asked DoT to ascertain more specific contents of the deal and advise the ministry on the same.
In its letter, DEA has also said that the transaction would need to adhere to the sectoral cap as per the FDI policy as also specific telecom sector regulations.
The talks between the two companies had been revived after a one-year hiatus, owing to the recently relaxed foreign direct investment norms. In February this year, the finance ministry changed FDI rules under Press Notes 2, 3 and 4.
Under the new rules, proportionate foreign holdings through various multi-layered investment companies would not be calculated for the purpose of FDI as long as Indians hold 51 per cent in each of these companies. Earlier, the proportionate foreign holding was calculated at every layer.
Therefore, keeping in mind the possibility of a change in the management structure as well as required approvals, the Foreign Investment Promotion Board has been asked to ensure that the company adheres to the sectoral cap, while keeping DEA in the loop.
While officials in DoT confirmed that DEA has sought details of the deal, they said that specific details have not been sought from Bharti Airtel as yet.
A senior DoT official said: "The deal has not been completed as yet. So we cannot seek specific details. Once the deal is completed, then only can we take a call or ask for more details."
A Bharti Airtel spokesperson said that the company has not received any official communication on the matter. Bharti Airtel and MTN entered into a period of exclusive talks from May 26, 2009, which are expected to be concluded by July 31.
According to the terms of the broad structure of the deal, the Sunil Mittal-promoted company will acquire a 49 per cent 'economic interest' in MTN.
Meanwhile, MTN will acquire 25 per cent 'economic interest' for $2.9 billion and MTN shareholders will acquire another 11 per cent in Bharti Airtel. In total, MTN and its shareholders will acquire 36 per cent in Bharti Airtel in the form of global depository receipts.
